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THE MINISTRY OF FINANCE

CIRCULAR No.52-TC/TCT OF AUGUST 16, 1997 GUIDING THE IMPLEMENTATION OF THE TREATIES ON AVOIDANCE OF DOUBLE TAXATION BETWEEN VIETNAM AND OTHER COUNTRIES

Pursuant to the current laws on profit tax, corporate income tax, income tax on high-income earners and tax on foreign investment in Vietnam;

In furtherance of treaties on avoidance of double taxation between Vietnam and other countries which have entered into force in Vietnam;

The Ministry of Finance hereby guides the implementation of a number of provisions of the above-said treaties on avoidance of double taxation (hereafter referred to as treaties), as follows:

I. SCOPE OF REGULATION OF THE TREATIES

1. Tax payers regulated by the treaties:

The treaties on avoidance of double taxation shall apply to subjects who are residents of Vietnam and other countries, which have signed such treaties with Vietnam, including: taxable individuals, companies and organizations in Vietnam and in the countries which have signed treaties with Vietnam on their entire revenues or assets, based on the criteria of their domiciles, places of residence, time of residence, management offices, registered offices, places of establishment of such business organizations or on any other similar criteria.

The General Department of Taxation hereby provides concrete guidances to establish the bases for determining the taxable objects under the above-said provisions.

2. Territory:

The treaties shall be applied within the territories, territorial seas, and exclusive economic zones under the national sovereignty of Vietnam and the countries which have signed such treaties with Vietnam.

3. Taxes covered by the treaties:

3.1. The treaties shall apply only to profit or income taxes levied or likely to be levied in the future by Vietnam and the signatory countries.

In Vietnam, the taxes payable under the treaties include:

a/ The profit tax under the Law on Profit Tax, the Law on Corporate Income Tax, the Law on the Promotion of Domestic Investment, the Law on Foreign Investment in Vietnam and the Law on Petroleum;

b/ The income tax on high-income earners;

c/ The tax on profit remittance abroad under the Law on Foreign Investment in Vietnam;

d/ The royalty tax;

e/ The profit tax on foreign shipping companies operating in Vietnam;

f/ The profit tax on foreign contractors operating in Vietnam outside the forms defined in the Law on Foreign Investment in Vietnam;

g/ The capital transfer tax;

h/ The kinds of profit tax and income tax other than or similar to the taxes mentioned in Points (a) to (g) above, which are to be levied in Vietnam (if any).

3.2. In addition to the taxes on profit or income as mentioned above, a number of treaties on avoidance of double taxation which Vietnam has signed with other countries shall also apply to taxes on equities. Where double taxation on equity arises between Vietnam and a signatory country, the Ministry of Finance shall provide specific guidance thereon.

3.3. Other taxes such as: turnover tax, value-added tax, special consumption tax, export tax and import tax, shall not be regulated by the treaties.

4. The basis for the calculation of tax, tax rates and the provisions on tax exemption and reduction under the treaties which are applicable to residents of Vietnam and of the countries which have signed the treaties with Vietnam shall be determined in accordance with the specific provisions of each treaty.

The General Department of Taxation shall provide concrete guidance for the implementation of these regulations.

II. ORGANIZING THE IMPLEMENTATION OF THE TREATIES:

In order that the provisions of the treaties on avoidance of double taxation which Vietnam has signed with other countries are properly and fully enforced, the Ministry of Finance provides the following for the organization and guidance for enforcement of the treaties:

1. Tasks and powers of the General Department of Taxation in enforcing the treaties:

Under the provisions of the treaties, all signatory countries shall have to nominate their respective representatives (referred to as competent agencies) to handle matters related to the enforcement of the treaties. For its part, the Vietnamese Government has assigned the Minister of Finance to act as the competent authority of Vietnam. In order to implement the provisions of the treaties, the Minister of Finance authorizes the General Director of the General Department of Taxation to perform the following tasks:

a/ To issue documents announcing the efficacy or inefficacy of each tax treaty after obtaining the approval of the Minister of Finance and notification from the Ministry for Foreign Affairs of Vietnam;

b/ To prepare documents explaining and guiding the implementation of provisions of the treaties;

c/ To organize, direct, guide and supervise the tax departments and organizations authorized to collect tax in implementing the treaties;

d/ To study and conduct negotiation with competent authorities of the countries which have signed the treaties with Vietnam on disputes, protests arising in the course of implementation of the treaties which require the settlement by bilateral agreements in accordance with provisions of the treaties;

e/ To exchange information with foreign tax agencies as prescribed by the treaties;

f/ To certify vouchers of tax payment in Vietnam for foreign organizations and individuals (upon request) for their tax deduction abroad;

g/ To issue residence permits to residents of Vietnam upon the requests of organizations and individuals.

2. The procedures for tax reimbursement under the treaties:

In cases when a subject has paid tax into the State budget in accordance with the tax laws of Vietnam, but who, under the provisions of a related treaty, is not liable to tax or that has overpaid the tax amount payable in Vietnam, they shall be entitled to request or authorize one of their lawful representatives to request the Ministry of Finance to reimburse the tax amount already paid. In such case, the Ministry of Finance shall guide the procedures and dossier for the tax reimbursement, as follows:

2.1. Such subject shall have to submit to the General Department of Taxation (under the Ministry of Finance) a dossier for tax reimbursement comprising:

a/ The application for tax reimbursement (clearly stating the tax amount to be reimbursed, the account number and the name of bank where the subject entitled to the tax reimbursement carries out transactions...);

b/ The residence permit of the country of residence issued by the tax agency;

c/ A notarized copy of the business license, if it is an organization, or a copy of passport, if it is an individual;

d/ The original of the tax payment voucher;

e/ The authorization contract notarized by the State public notary or certified by the People�s Committee of the competent level, for a person authorized by the subject;

f/ The other vouchers and documents to be used as basis for tax reimbursement as required by the tax agency.

2.2. The General Department of Taxation shall examine the tax reimbursement dossiers in accordance with the treaties, then submit them to the Ministry of Finance for decisions on tax reimbursement.

2.3. Basing itself on the decisions of the Ministry of Finance on the tax reimbursement to the tax payers, the Department of State Budget shall carry out procedures for the tax reimbursement. In cases where a tax reimbursement is made in foreign currency(ies) or remitted into an overseas account upon the request of the tax payer, the Department of State Budget shall carry out procedures for payment in accordance with the current regime on State budget expenditures in foreign currency(ies).

2.4. Within 60 days after receiving in full the tax reimbursement dossiers, the Ministry of Finance shall complete the procedures for tax reimbursement or reply in writing.

3. Settlement of complaints:

Under the provisions of the treaties, if a resident of Vietnam deems that his/her payment of tax varies with the provisions of the treaties, he/she is entitled to file protest to a competent agency for settlement. The Ministry of Finance guides the procedures for filing and settling complaints as follows:

3.1. Such subject can lodge a complaint according to the procedures prescribed by the Vietnamese law as well as provisions of the tax laws of Vietnam on complaints settlement.

3.2. Such subject can directly lodge a complaint to the General Department of Taxation (under the Ministry of Finance) without following the complaint-settling procedures mentioned in Point 3.1 above.

Such complaint shall be settled within a time limit prescribed in the provision of the treaties on "the bilateral agreement procedures".

3.3. Vietnam�s General Department of Taxation shall, on behalf of the Ministry of Finance, consider and settle complaints. When necessary, the General Department of Taxation of Vietnam shall negotiate with the competent authorities for the treaties of other countries which have signed treaties with Vietnam to settle such complaints through bilateral agreements.

3.4. Vietnam�s General Department of Taxation shall have to coordinate with the competent authorities for the treaties of other countries which have signed such treaties with Vietnam in settling the tax complaints lodged by residents of such countries in accordance with the provisions of the treaties.

4. Implementation provisions:

This Circular takes effect after its signing.

For the Minister of Finance

Vice Minister

VU MONG GIAO